Reciprocity

Social scientists, biologists, and behavioral psychologists have extensively explored the sources of reciprocal behavior and the conditions for the sustainability of reciprocity in various categories of interactions. Consider these oft-quoted colloquialisms: “Do unto others as you would have done unto you.” “If you scratch my back, Ill scratch yours.” “Tit for tat.” These pieces of collective wisdom come to mind for many people when they think of reciprocity. In the existing social science literature, the term reciprocity refers to a broad range of concepts. In an attempt to distinguish different economic concepts of reciprocity, this entry provides a taxonomy of reciprocity, which includes the concepts of structural reciprocity, stochastic reciprocity, and induced reciprocity.

The idea of reciprocity assumes peculiar importance in a world where there is no external authority to enforce agreements, that is, in a Hobbesian state of nature. In many game-theoretic situations, reciprocity permits the emergence and stability of cooperative outcomes, even in a lawless world when agreements between the players are not enforceable. In consideration of reciprocal constraints undertaken by the other members of the community, individuals who frequently exchange roles in their social interactions have incentives to constrain their behavior to conform to socially optimal norms of conduct. An even stronger logic explains the emergence of cooperation in situations of induced reciprocity. In both cases, the nonidealistic and self-interested behavior of human actors is yet capable of generating optimal norms.